Halcom One: a PSD2-Compliant Open Banking Solution

Jun 21, 2017

Halcom presented its open banking solution, Halcom One, at the conference ’New Challenges in the Financial Services Industry’, which was held at Brdo pri Kranju on 13th June 2017. The solution is fully compliant with the EU's Second Payment Services Directive, or PSD2, and is intended for banks and financial institutions. At the event Halcom's representatives spoke about new changes that open banking will bring to the European market. They also presented several case studies of Halcom One solutions which comprise the following elements: Open API, a PSD2 compliant open-source application interface; OneID, a Cloud-based qualified digital certificate; AntiFraud, a fraud prevention system; and Communication Hub, a mass communication tool. The solution can be expanded to include innovative value added services and a range of supplementary services. In order to facilitate smooth adaptation to regulatory requirements, Halcom has built its own Developer Portal to provide users with detailed information, API descriptions and other required technical documents.

The EU’s Revised Payment Services Directive, or PSD2, and the related Open Banking initiatives will have a profound effect on the future of the financial industry. Banks will need to be able to open APIs with the consent of their users, provide access to information about customer accounts and transactions, and enable authorisation of payments directly from users’ accounts.

In this way, the balance of power will shift to customers, while third-party providers will be able to offer comprehensive reviews of customers’ financial data and develop their own payment platforms. This is also an opportunity for banks to take on an active role and use their access to the accounts of other banks with the aim of developing new, higher value added services. In short, the revised directive brings benefits for all corners of the financial triangle: consumers, banks, and third-party providers, and Halcom One’s comprehensive platform brings these benefits closer to all the stakeholders.

The benefits of PSD2 for consumers

The implementation of PSD2 shifts the balance of power onto customers, providing them with several additional benefits:

A complete view of all financial affairs and lower associated charges. Currently, banks normally provide customers with separate account balance statements in non-standardised forms through a range of tools and solutions. With PSD2, in effect, customers will be able to decide where, and under what conditions, they wish to access their financial data and conduct payments. They will receive a comprehensive view of all their accounts through advanced applications provided by banks and third-party providers (TPPs).

Shorter payment processing times, a wider choice of payment instruments, and lower costs. Today most customer payments are handled by many intermediaries, which increases the complexity and cost of payment processing and causes time delays in transferring funds from the payer’s to the payee’s account. With PSD2, third-party providers (e.g. fintechs, retailers, online stores, telcos, energy providers) will be able to initiate payments directly from a user’s account. This will provide customers with a wider choice of payment instruments and ensure real-time responsiveness of payments, lower transaction fees and, consequently, a better user experience.

The benefits of open banking for banks

A key requirement under PSD2 is to facilitate access to internal IT systems for third-party providers (TPPs).

Banks may decide to remain passive when these changes occur, and only implement minimum adaptations. However, a more active approach is advised. In this case, banks will prepare a growth strategy that will consider the opportunities arising from the ability to access other banks’ accounts and collaboration with fintechs and TPPs. By collaborating with companies that possess the necessary expertise and provide solutions in this segment, an innovative bank can offer its customers and the customers of other banks an excellent user experience of an advanced uniform platform that provides a single, complete view of all financial affairs, innovative complementary products and services, and real-time payments for lower fees.

Those banks that deploy cutting-edge platforms and provide an exceptional user experience will enjoy a competitive advantage in winning over customers and building partnerships.

The benefits of PSD2 for third-party providers

TPPs can use the PSD2 business model to develop their own payment platforms that will help them reduce transaction fees and build tighter relationships with their customers. This is particularly important for large corporations, which are currently facing considerable costs for receiving payments for their products and services (e.g. telcos, retailers, energy providers, insurance companies). In addition to bank account information, these institutions will now be able to provide a comprehensive picture of a user's financial situation via integrated online or mobile portals. In this respect, collaboration with companies that possess knowledge and experience from the banking industry is advised.

In short, PSD2 brings limitless opportunities for all three stakeholders forming the financial triangle. With Halcom One, Halcom has presented a solution that will, in accordance with the requirements of PSD2, enable banks and TPPs to create innovative products with a great user experience by putting customers first.